Niagara County seeks $2 million in sixth Medicaid lawsuit

LOCKPORT – Niagara County, which has won five consecutive lawsuits against the state Health Department over reimbursements for Medicaid mental health services, filed another suit last week.

The county is seeking slightly over $2 million this time – money that the Health Department refused to pay after the county submitted six claims between Oct. 26 and Dec. 20.

The county sued the state in State Supreme Court, demanding an outcome similar to the previous five cases, which brought the county a total of $1.47 million in reimbursements.

However, this time the lawsuit seeks to overturn a state law passed last year that attempts to protect the state from having to pay these types of claims.

Normally, counties have to pay 25 percent of the cost of services provided under Medicaid. However, special rules for mental health cases require the state to reimburse the counties for their share.

It’s not the first time the State Legislature passed a law to try to keep the counties from collecting these reimbursements. A 2010 effort was, in effect, invalidated by judges who kept deciding in favor of the counties.

Gov. Andrew M. Cuomo’s executive budget that passed last year included a provision retroactively amending the 2005 Medicaid cap law to bar reimbursements for services rendered before Jan. 1, 2006. That’s the amendment the new lawsuit seeks to overturn, asserting that it contradicts the provision of the Social Services Law that has said for years that the counties must be reimbursed. Although the county’s claims were submitted last year, they covered cases occurring before 2006.

A state Health Department spokesman said he anticipated that the department would have no comment on the litigation.

Social Services Commissioner Anthony J. Restaino said Niagara is one of only three counties that have pursued lawsuits over reimbursements for mental health services for poor clients that predate the Medicaid cap law of 2005.

The others are Herkimer and St. Lawrence counties.

Although every county in the state was affected by the Health Department’s rulings on what are called “Medicaid overburden” payments, Restaino speculated, “I don’t think they have availed themselves of the legal services we have.”

A Utica attorney, Nancy Rose Stormer, has been representing Niagara and the other counties in these cases since 2007. Restaino said Stormer receives 25 percent of the counties’ proceeds as her fee.

“You have to have the ability to identify the cases that fall under this coding. She does that,” Restaino said. “I don’t have anybody on the staff that has the ability to do it. She wasn’t going to get any fee unless she delivered results.”

In the latest lawsuit, Stormer says the Health Department has claimed that there was “miscoding” in the past but never explained how the alleged mistakes might have occurred.

She said that there has purportedly been “miscoding for more than 20 years in every county.”

In her opinion, it’s not miscoding at all, but a deliberate policy “intended to deprive the counties of the reimbursement to which they are entitled.”